Investors face another Washington deadline

NEW YORK (Reuters) - Investors face another Washington-imposed deadline on government spending cuts next week, but it's not generating the same level of fear as two months ago when the "fiscal cliff" loomed large.

Investors in sectors most likely to be affected by the cuts, like defense, seem untroubled that the budget talks could send stocks tumbling.

Talks on the U.S. budget crisis began again this week leading up to the March 1 deadline for the so-called sequestration when $85 billion in automatic federal spending cuts are scheduled to take effect.

"It's at this point a political hot button in Washington but a very low level investor concern," said Fred Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. The fight pits President Barack Obama and fellow Democrats against congressional Republicans.

Stocks rallied in early January after a compromise temporarily avoided the fiscal cliff, and the Standard & Poor's 500 index <.spx> has risen 6.3 percent since the start of the year.

But the benchmark index lost steam this week, posting its first week of losses since the start of the year. Minutes on Wednesday from the last Federal Reserve meeting, which suggested the central bank may slow or stop its stimulus policy sooner than expected, provided the catalyst.

National elections in Italy on Sunday and Monday could also add to investor concern. Most investors expect a government headed by Pier Luigi Bersani to win and continue with reforms to tackle Italy's debt problems. However, a resurgence by former leader Silvio Berlusconi has raised doubts.

"Europe has been in the last six months less of a topic for the stock market, but the problems haven't gone away. This may bring back investor attention to that," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

OPTIONS BULLS TARGET GAINS

The spending cuts, if they go ahead, could hit the defense industry particularly hard.

Yet in the options market, bulls were targeting gains in Lockheed Martin Corp , the Pentagon's biggest supplier.

Calls on the stock far outpaced puts, suggesting that many investors anticipate the stock to move higher. Overall options volume on the stock was 2.8 times the daily average with 17,000 calls and 3,360 puts traded, according to options analytics firm Trade Alert.

"The upside call buying in Lockheed solidifies the idea that option investors are not pricing in a lot of downside risk in most defense stocks from the likely impact of sequestration," said Jared Woodard, a founder of research and advisory firm condoroptions.com in Forest, Virginia.

The stock ended up 0.6 percent at $88.12 on Friday.

If lawmakers fail to reach an agreement on reducing the U.S. budget deficit in the next few days, a sequester would include significant cuts in defense spending. Companies such as General Dynamics Corp and Smith & Wesson Holding Corp could be affected.

General Dynamics Corp shares rose 1.2 percent to $67.32 and Smith & Wesson added 4.6 percent to $9.18 on Friday.

EYES ON GDP DATA, APPLE

The latest data on fourth-quarter U.S. gross domestic product is expected on Thursday, and some analysts predict an upward revision following trade data that showed America's deficit shrank in December to its narrowest in nearly three years.

U.S. GDP unexpectedly contracted in the fourth quarter, according to an earlier government estimate, but analysts said there was no reason for panic, given that consumer spending and business investment picked up.

Investors will be looking for any hints of changes in the Fed's policy of monetary easing when Fed Chairman Ben Bernake speaks before congressional committees on Tuesday and Wednesday.

Shares of Apple will be watched closely next week when the company's annual stockholders' meeting is held.

On Friday, a U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his battle with the iPhone maker, blocking the company from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.

(Additional reporting by Doris Frankel; Editing by Kenneth Barry)

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South Africa's Pistorius awarded bail in murder case

PRETORIA (Reuters) - A South African court granted bail on Friday to Oscar Pistorius, charged with the murder of his girlfriend, after his lawyers argued the "Blade Runner" was too famous to pose a flight risk.

The decision by Magistrate Desmond Nair drew cheers from the athlete's family and supporters, although he appeared unmoved. Pistorius had broken down in tears earlier in the week-long hearing.

The court set bail at 1 million rand ($113,000) and postponed the case until June 4. Pistorius was ordered to hand over firearms and passports, avoid his home and all witnesses in the case, report to a police station twice a week and not to drink alcohol.

The decision followed a week of dramatic testimony about how the athlete shot dead Reeva Steenkamp at his luxury home near Pretoria in the early hours of February 14, Valentine's Day.

Prosecutors said Pistorius, 26, committed premeditated murder when he fired four shots into a locked bathroom door, hitting his girlfriend cowering on the other side. Steenkamp, 29, suffered gunshot wounds to her head, hip and arm.

Pistorius' defense team argued the killing was a tragic mistake, saying the athlete had mistaken Steenkamp for an intruder. They said he was too famous to pose a flight risk and deserved bail to prepare for a case that has drawn worldwide attention.

"He can never go anywhere unnoticed," his lawyer Barry Roux told the court on Friday.

The 26-year-old Olympic and Paralympic star's lower legs were amputated in infancy and he has raced on carbon fiber blades.

The Olympic and Paralympic star faces life in prison if convicted of premeditated murder.

Prosecutors had portrayed him as a cold-blooded killer.

"You cannot put yourself in the deceased's position. It must have been terrifying. It was not one shot. It was four shots," prosecutor Gerrie Nel said on Friday.

SHOTS AND SCREAMS

In an affidavit read out in court, Pistorius said he had been "deeply in love" with Steenkamp, and Roux said his client had no motive for the killing.

Pistorius contends he was acting in self-defense after mistaking Steenkamp for an intruder, and feeling vulnerable because he was unable to attach his prosthetic limbs in time to confront the perceived threat.

He said he grabbed a 9-mm pistol from under his bed and went into the bathroom. He said he fired into the locked door of the toilet, which adjoined the bathroom, in a blind panic in the mistaken belief the intruder was lurking inside.

Witnesses said they heard a gunshots and screams from the athlete's home on an upscale gated community near Pretoria. The community is surrounded by 3-metre-high stone walls and topped with an electric fence.

In a magazine interview a week before her death, published on Friday, Steenkamp, a law graduate and model, spoke about her three-month-old relationship with Pistorius.

"I absolutely adore Oscar. I respect and admire him so much," she told celebrity gossip magazine Heat. "I don't want anything to come in the way of his career."

Police pulled their lead detective off the case on Thursday after it was revealed he himself faces attempted murder charges for shooting at a minibus. He has been replaced by South Africa's top detective.

The arrest of Pistorius last week shocked those who had watched in awe last year as he reached the semi-final of the 400 meters race in the London Olympics.

The impact has been greatest in sports-mad South Africa, where Pistorius was seen as a rare hero who commanded respect from both black and white people, transcending the racial divides that persist 19 years after the end of apartheid.

(Editing by Andrew Roche)

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Oscar Pistorius to Be Released on Bail

Breaking News

By Stephen M. Silverman

02/22/2013 at 09:25 AM EST

Oscar Pistorius, Feb. 22, 2013

AP

Prosecutors in South Africa were defeated Friday in their effort to deny bail for "Blade Runner" Oscar Pistorius, the double-amputee track star accused of the premeditated Feb. 14 murder of his girlfriend, Reeva Steenkamp.

Pistorius will be released on U.S. $114,000 bail, CNN reports.

Chief Magistrate Desmond Nair announced his decision in a packed Pretoria courtroom Friday afternoon. Over the past four days during the bail hearing, both authorities and Pistorius's legal team agreed that he killed Steenkamp, 29, but the athlete says he killed her accidentally after he mistook her for an intruder.

In final arguments Friday morning, prosecutor Gerrie Nel, having called the accused a flight risk, told the judge that Pistorius, 26, didn't deserve bail. CNN reports. "He must realize that long-term imprisonment is almost guaranteed," said Nel. "He might think he'll be acquitted."

The prosecutor also said: "We all know that a lot of important people were granted bail and they stayed in the country. But lots of very important people have escaped."

"What kind of life would he lead if he were to flee?" asked the magistrate.

"A life of freedom," Nel replied.

The judge later said in lengthy remarks leading up to his decision Friday that he did not find that it had been established that Pistorius posed a flight risk. Nair also said that he was aware that releasing the accused could lead to "shock and outrage" in the community.

Entering the courtroom Friday, Pistorius bowed his head, and later appeared to be holding back tears when Nel recounted Steenkamp's plight on the fateful night, reports The New York Times.

"I am not saying the planning of the murder of Reeva Steenkamp happened weeks ahead, days ahead," said Nel, according to the newspaper. "I am saying the planning to kill Reeva Steenkamp happened that night."

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Govs to hear Oregon health care plan

SALEM, Ore. (AP) — Oregon Gov. John Kitzhaber will brief other state leaders this weekend on his plan to lower Medicaid costs, touting an overhaul that President Barack Obama highlighted in his State of the Union address for its potential to lower the deficit even as health care expenses climb.

The Oregon Democrat leaves for Washington, D.C., on Friday to pitch his plan that changes the way doctors and hospitals are paid and improves health care coordination for low income residents so that treatable medical problems don't grow in severity or expense.

Kitzhaber says his goal is to win over a handful of other governors from each party.

"I think the politics have been dialed down a couple of notches, and now people are willing to sit down and talk about how we can solve the problem" of rising health care costs, Kitzhaber told The Associated Press in a recent interview.

Kitzhaber introduced the plan in 2011 in the face of a severe state budget deficit, and he's been talking for two years about expanding the initiative beyond his state. Now, it seems he's found people ready to listen.

Hospital executives from Alabama visited Oregon last month to learn about the effort. And the U.S. Department of Health and Human Services announced Thursday that it's giving Oregon a $45 million grant to help spread the changes beyond the Medicaid population and share information with other states, making it one of only six states to earn a State Innovation Model grant.

Kitzhaber will address his counterparts at a meeting of the National Governors Association. His talk isn't scheduled on the official agenda, but a spokeswoman confirmed that Kitzhaber is expected to present.

"The governors love what they call stealing from one another — taking the good ideas and the successes of their colleagues and trying to figure out how to apply that in their home state," said Matt Salo, director of the National Association of Medicaid Directors.

There's been "huge interest" among other states in Oregon's health overhaul, Salo said, not because the concepts are brand new, but because the state managed to avoid pitfalls that often block health system changes.

Kitzhaber persuaded state lawmakers to redesign the system of delivering and paying for health care under Medicaid, creating incentives for providers to coordinate patient care and prevent avoidable emergency room visits. He has long complained that the current financial incentives encourage volume over quality, driving costs up without making people healthier.

Obama, in his State of the Union address this month, suggested that changes such as Oregon's could be part of a long-term strategy to lower the federal debt by reigning in the growing cost of federally funded health care.

"We'll bring down costs by changing the way our government pays for Medicare, because our medical bills shouldn't be based on the number of tests ordered or days spent in the hospital — they should be based on the quality of care that our seniors receive," Obama said.

The Obama administration has invested in the program, putting up $1.9 billion to keep Oregon's Medicaid program afloat over the next five years while providers make the transition to new business models and incorporate new staff and technology.

In exchange, though, the state has agreed to lower per-capita health care cost inflation by 2 percentage points without affecting quality.

The Medicaid system is unique in each state, and Kitzhaber isn't suggesting that other states should adopt Oregon's specific approach, said Mike Bonetto, Kitzhaber's health care policy adviser. Rather, he wants governors to buy into the broad concept that the delivery system and payment models need to change.

That's not a new theory. But Oregon has shown that under the right circumstances massive changes to deeply entrenched business models can gain wide support.

What Oregon can't yet show is proof the idea is working — that it's lowering costs without squeezing on the quality or availability of care. The state is just finishing compiling baseline data that will be used as a basis of comparison.

One factor driving the Obama administration's interest in Oregon's success is the president's health care overhaul. Under the Affordable Care Act, millions more Americans will join the Medicaid rolls after Jan. 1, and the health care system will have to be able to absorb the influx of patients in a logistically and financially sustainable way.

The federal government will pay 100 percent of the costs for those additional patients in the first three years before scaling back to 90 percent in 2020 and beyond.

"There are a lot of governors who are facing the same challenges we're facing in Oregon," Kitzhaber said. "They recognize that the cost of health care is something they're going to have to get their arms around."

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Wall Street opens higher on data, HP earnings

NEW YORK (Reuters) - Stocks opened higher Friday after two days of losses, lifted by better-than-expected earnings from Hewlett-Packard Co and positive economic data from Europe.

HP, a Dow component, jumped 7.4 percent to $18.34 in early trading.

The Dow Jones industrial average <.dji> was up 45.85 points, or 0.33 percent, at 13,926.47. The Standard & Poor's 500 Index <.spx> was up 6.06 points, or 0.40 percent, at 1,508.48. The Nasdaq Composite Index <.ixic> was up 18.48 points, or 0.59 percent, at 3,149.98.

(Reporting by Ryan Vlastelica; Editing by Bernadette Baum)

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Cameroon, Nigeria officials deny French hostages freed

YAOUNDE (Reuters) - The fate of seven French tourists seized in Cameroon by suspected Nigerian Islamist militants was unclear on Thursday after government officials denied French media reports that they had been freed.

The hostages, four children and three adults, were captured this week while on an excursion to the Waza national park near Cameroon's border with Nigeria.

Several French media reported earlier on Thursday that the hostages had been found alive in a house in northern Nigeria and freed.

"The hostages are safe and sound and are in the hands of Nigerian authorities," BFMTV quoted a Cameroon army officer as saying.

"This is a crazy rumor that we cannot confirm. We do not know where is it coming from," Cameroon Communications Minister Issa Tchiroma Bakary said by telephone from the capital Yaounde.

Sagir Musa, a spokesman for Nigeria's military, told Reuters the report was "not true."

Kader Arif, France's minister for veterans' affairs, told parliament on Thursday that the seven hostages had been released but retracted his statement minutes later, saying he had been quoting media reports and there was no official confirmation.

It was the first case of foreigners being seized by suspected Islamist militants in the mainly Muslim north of Cameroon, a former French colony.

The region is seen as being within the operational sphere of Nigerian sect Boko Haram and another Islamist militant group, Ansaru.

The threat to French nationals in the region has grown since France deployed thousands of troops to nearby Mali to root out al Qaeda-linked Islamists who took control of the country's north last year.

The kidnapping in Cameroon brought to 15 the number of French citizens being held in West Africa.

French diplomatic sources said the government would not confirm the hostages had been released until it had physical proof, or until they were in French hands.

(Reporting By Emile Picy and Nicholas Vinocur in Paris; Additional reporting by Joe Brock in Abuja and Bate Felix and John Irish in Dakar; Editing by Pravin Char and Tom Pfeiffer)

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Michelle Williams 'Really Working' on Growing Out Her Hair

Stylewatch
Style News Now

02/20/2013 at 06:00 PM ET

Lionel Hahn/Abaca; Christopher Peterson/Splash New

Anne Hathaway and Miley Cyrus may be totally committed to their short haircuts, but one famously gamine star is ready to ditch her pixie: Michelle Williams.

“I think I’m ready,” Williams, 32, told E! News at a press junket for her film Oz: The Great and Powerful. “It’s on its way, slowly but surely.”

Don’t expect rapid change from the star, who’s had her signature platinum short cut since debuting the look at Cannes in 2010: “I might want it now, but I’ll have it in three years,” she joked of the slow growing-out time.

In fact, that in-between stage is why she’s waited so long to start the transition. “The mid-stage is insufferable,” she said. “It’s really hard on your self-esteem.”

We have to say, she’s managing it quite nicely, showing off a punky asymmetrical look Wednesday outside Late Night With David Letterman. And since her moviemaking schedule is clear for a bit, she joked that she’s ready to devote herself to the new length. “I’m really happy to not have anything looming — except my hair,” she told E! “I’m really working on growing my hair out!”

Tell us: Are you looking forward to seeing Williams with longer hair (here’s a refresher pic) or do you prefer her pixie?

–Alex Apatoff

PHOTOS: VOTE ON MORE CELEB HAIR MAKEOVERS HERE!

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Adults get 11 percent of calories from fast food

ATLANTA (AP) — On an average day, U.S. adults get roughly 11 percent of their calories from fast food, a government study shows.

That's down slightly from the 13 percent reported the last time the government tried to pin down how much of the American diet is coming from fast food. Eating fast food too frequently has been seen as a driver of America's obesity problem.

For the research, about 11,000 adults were asked extensive questions about what they ate and drank over the previous 24 hours to come up with the results.

Among the findings:

— Young adults eat more fast food than their elders; 15 percent of calories for ages 20 to 39 and dropping to 6 percent for those 60 and older.

— Blacks get more of their calories from fast-food, 15 percent compared to 11 percent for whites and Hispanics.

— Young black adults got a whopping 21 percent from the likes of Wendy's, Taco Bell and KFC.

The figures are averages. Included in the calculations are some people who almost never eat fast food, as well as others who eat a lot of it.

The survey covers the years 2007 through 2010 and was released Thursday by the Centers for Disease Control and Prevention. The authors couldn't explain why the proportion of calories from fast food dropped from the 13 percent found in a survey for 2003 through 2006.

One nutrition professor cast doubts on the latest results, saying 11 percent seemed implausibly low. New York University's Marion Nestle said it wouldn't be surprising if some people under-reported their hamburgers, fries and milkshakes since eating too much fast food is increasingly seen as something of a no-no.

"If I were a fast-food company, I'd say 'See, we have nothing to do with obesity! Americans are getting 90 percent of their calories somewhere else!'" she said.

The study didn't include the total number of fast-food calories, just the percentage. Previous government research suggests that the average U.S. adult each day consumes about 270 calories of fast food — the equivalent of a small McDonald's hamburger and a few fries.

The new CDC study found that obese people get about 13 percent of daily calories from fast food, compared with less than 10 percent for skinny and normal-weight people.

There was no difference seen by household income, except for young adults. The poorest — those with an annual household income of less than $30,000 — got 17 percent of their calories from fast food, while the figure was under 14 percent for the most affluent 20- and 30-somethings with a household income of more than $50,000.

That's not surprising since there are disproportionately higher numbers of fast-food restaurants in low-income neighborhoods, Nestle said.

Fast food is accessible and "it's cheap," she said.

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Wall Street opens lower after jobless data

TORONTO, Feb 20 (Reuters) - Canada's Rebecca Marino, a rising star in women's tennis, stepped away from the sport in search of a normal life on Wednesday, weary of battling depression and cyber-bullies. Ranked number 38 in the world two years ago, the 22-year-old admitted she had long suffered from depression and was no longer willing to make the sacrifices necessary to reach the top. "After thinking long and hard, I do not have the passion or enjoyment to drive myself to the level I would like to be at in professional tennis," Marino explained in a conference call. ...

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Bulgarian government resigns amid growing protests

SOFIA (Reuters) - Bulgaria's government resigned on Wednesday after violent nationwide protests against high power prices, joining a long list of European administrations felled by austerity during Europe's debt crisis.

Prime Minister Boiko Borisov, a former bodyguard who swept to power in 2009 on pledges to root out corruption and raise living standards in the European Union's poorest member, now faces a tough task to prop up eroding support ahead of a probable early election.

Wage and pension freezes and tax hikes have bitten deep in a country where living standards are less than half the EU average and tens of thousands of Bulgarians have rallied in protests that have turned violent, chanting "Mafia" and "Resign".

On Tuesday, 11 people were hospitalized - including one man bleeding heavily from the head - and 11 arrested after protesters threw flares at police, who fought demonstrators with shields and truncheons.

"I will not participate in a government under which police are beating people," Borisov, who began his career guarding the Black Sea state's communist dictator Todor Zhivkov, said as he announced his resignation on Wednesday.

Parliament is expected to accept the resignation later in the day.

The spark for the protests was high electricity bills, after the government raised prices by 13 percent last July. But it quickly spilled over into wider frustration with Borisov's domineering manner and unpredictable decision making.

The prime minister made sacrifices in an attempt to cling on, sacking his finance minister, cutting power prices and risking a diplomatic row with the Czech Republic by punishing foreign-owned companies, a move that conflicted with EU norms on protection of investors and due process.

Borisov's rightist GERB party is the dominant faction in parliament but will not take part in talks to form a new government, Interior Minister Tsvetan Tsvetanov said, indicating that an election planned for July will now be held early.

"He made my day," student Borislav Hadzhiev, 21, in central Sofia said, commenting on Borisov's resignation. "The truth is that we're living in an extremely poor country."

IRE

GERB's popularity has held up well and it still leads, just, in the polls, largely because budget cutbacks have been relatively mild compared with those in many other European countries. Salaries and pensions were frozen rather than cut.

But the last opinion poll, taken before protests grew last weekend already showed the opposition Socialists were nearly tied with the ruling party and analysts said the protests had boosted the Socialists' chances.

Unemployment in the country of 7.3 million is far from the highs hit in the decade after the end of communism but remains at 11.9 percent and average salaries are stuck at around 800 levs ($550) a month.

Millions have emigrated in search of a better life, leaving swathes of the country depopulated and little hope for those who remain.

The measures announced this week has also put the country on a collision course with the EU and financial investors without easing the tension at home.

Czech Prime Minister Petr Necas demanded an explanation from Bulgaria and accused it of "politicizing" the power sector by threatening to revoke the electricity distribution license of central Europe's largest listed company CEZ, 70 percent of which is owned by the Czech state.

There have also been fines for another Czech company, Energo-Pro and Austria's EVN.

The precedent is unlikely to encourage other foreign investors, who already have to navigate complicated bureaucracy and widespread corruption and organized crime if they want to take advantage of Bulgaria's 16-percent flat tax rate.

"The resignation is the only responsible move," said Kantcho Stoychev, an analyst with pollster Gallup International. "It also gives Borisov some legitimacy to stay in political life in the future, despite the violent police actions last night."

(Additional reporting by Angel Krasimirov; editing by Patrick Graham)

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